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Celebrate ... then stay intense about paying off debt

Posted: Dec. 6, 2017 12:01 am

Dear Dave,

I just accepted a new job that will pay me $30,000 a year more than my old position. I've got about $55,000 in debt I've been working hard to pay off, and I know now I need to adjust my budget. Do you have any advice?

Mitch

Dear Mitch,

The first thing I'd say is don't go crazy on any big-ticket items while you're paying off debt. Keep it simple, and go out to celebrate with a nice dinner after you get your first paycheck.

Remember, the more you put toward debt, the faster it goes away.

For the time being, I want you to remain passionate about getting out of debt. Your thought process needs to be, "Wow, I got a new job making more money. I can get out of debt even quicker!"

Again, I'm OK with you adjusting a bit that first month and having a little fun to celebrate your good fortune. But after that, I want you to turn around and attack that debt with even more intensity than before. Then, once you're out of debt, you can celebrate that with something a lot nicer.

Congratulations, Mitch!

-- Dave

Dear Dave,

You say to never give collectors access to your checking account. Does that include debit cards, too?

Sue

Dear Sue,

Yes, it does! Collectors are looking to get as much as they can on a bad, late debt. I've seen numerous situations where collectors have taken more than the agreed-upon amount from someone's account once they gained access. To be fair, the collection business does have a few good people in it. But it also has those who will lie and make threats.

If you're doing something like scheduling utility payments to come through your debit card or out of your personal checking account, that's perfectly fine. But there are much safer ways to handle situations with debt collectors. You can send a money order overnight, or wire the cash to them. You can also send a cashier's check. Some folks have even used pre-paid debit cards that aren't attached to any of their accounts.

The pre-paid debit card isn't my favorite way to handle these things, but it's a lot better than giving a dishonest collector the opportunity to really mess you up!

-- Dave

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Dave Ramsey is CEO of Ramsey Solutions. He has authored five best-selling books and hosts "The Dave Ramsey Show" on more than 550 radio stations. Follow Dave on Twitter @DaveRamsey and on the web at daveramsey.com.